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Derivative Activities | 3 Months Ended
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Mar. 31, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivative Activities | (11) DERIVATIVE ACTIVITIES We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. We do not utilize complex derivatives as we typically utilize commodity swaps or collars to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget and expenditure plans. The fair value of our derivative contracts, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price, generally the New York Mercantile Exchange (“NYMEX”) for natural gas and oil or Mont Belvieu for NGLs, approximated a net unrealized pre-tax gain of $430.1 million at March 31, 2015. These contracts expire monthly through December 2017. The following table sets forth our commodity-based derivative volumes by year as of March 31, 2015, excluding our basis swaps which are discussed separately below:
Period |  | Contract Type |  | Volume Hedged |  | Weighted Average Hedge Price
Natural Gas |  |  |  |  |  |
2015 |  | Collars |  | 145,000 Mmbtu/day |  | $ 4.07–$ 4.56
2015 |  | Swaps |  | 730,809 Mmbtu/day |  | $ 3.64
2016 |  | Swaps |  | 622,500 Mmbtu/day |  | $ 3.42
2017 |  | Swaps |  | 20,000 Mmbtu/day |  | $ 3.49
Crude Oil |  |  |  |  |  |
2015 |  | Swaps |  | 10,671 bbls day |  | $ 87.26
2016 |  | Swaps |  | 2,000 bbls/day |  | $ 75.35
NGLs (C3-Propane) |  |  |  |  |  |
2015 |  | Swaps |  | 13,331 bbls/day |  | $ 0.61/gallon
2016 |  | Swaps |  | 5,500 bbls/day |  | $ 0.60/gallon
NGLs (NC4-Normal Butane) |  |  |  |  |  |
2015 |  | Swaps |  | 3,500 bbls/day |  | $ 0.72/gallon
2016 |  | Swaps |  | 2,500 bbls/day |  | $ 0.72/gallon
NGLs (C5-Natural Gasoline) |  |  |  |  |  |
2015 |  | Swaps |  | 3,335 bbls/day |  | $ 1.15/gallon
2016 |  | Swaps |  | 2,000 bbls/day |  | $ 1.21/gallon
Every derivative instrument is required to be recorded on the balance sheet as either an asset or a liability measured at its fair value. If the derivative does not qualify as a hedge or is not designated as a hedge, changes in fair value of these non-hedge derivatives are recognized in earnings as derivative fair value income or loss. Basis Swap Contracts In addition to the collars and swaps above, at March 31, 2015, we had natural gas basis swap contracts that are not designated for hedge accounting, which lock in the differential between NYMEX and certain of our physical pricing indices primarily in Appalachia. These contracts settle monthly through March 2017 and the volumes are for 44,070,000 Mmbtu. The fair value of these contracts was a loss of $1.4 million on March 31, 2015. Derivative Assets and Liabilities The combined fair value of derivatives included in the accompanying consolidated balance sheets as of March 31, 2015 and December 31, 2014 is summarized below. The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements. The tables below provide additional information relating to our master netting arrangements with our derivative counterparties (in thousands):
|  |  | March 31, 2015 |
|  |  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of Assets Presented in the Balance Sheet |
Derivative assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –swaps |  | $ | 242,156 |  |  | $ | — |  |  | $ | 242,156 |
| –collars |  |  | 51,439 |  |  |  | — |  |  |  | 51,439 |
| –basis swaps |  |  | 1,211 |  |  |  | (1,487 | ) |  |  | (276 | )
Crude oil | –swaps |  |  | 113,693 |  |  |  | — |  |  |  | 113,693 |
NGLs | –C3 swaps |  |  | 15,883 |  |  |  | (1,448 | ) |  |  | 14,435 |
| –NC4 swaps |  |  | 4,687 |  |  |  | — |  |  |  | 4,687 |
| –C5 swaps |  |  | 3,721 |  |  |  | — |  |  |  | 3,721 |
|  |  | $ | 432,790 |  |  | $ | (2,935 | ) |  | $ | 429,855 |
|  |  | March 31, 2015 |
|  |  | Gross Amounts of Recognized (Liabilities) |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of (Liabilities) Presented in the Balance Sheet |
Derivative (liabilities): |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –basis swaps |  | $ | (2,629 | ) |  | $ | 1,487 |  |  | $ | (1,142 | )
NGLs | –C3 swaps |  |  | (1,448 | ) |  |  | 1,448 |  |  |  | — |
|  |  | $ | (4,077 | ) |  | $ | 2,935 |  |  | $ | (1,142 | )
|  |  | December 31, 2014 |
|  |  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of Assets Presented in the Balance Sheet |
Derivative assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –swaps |  | $ | 198,740 |  |  | $ | — |  |  | $ | 198,740 |
| –collars |  |  | 57,460 |  |  |  | — |  |  |  | 57,460 |
| –basis swaps |  |  | 2,442 |  |  |  | (755 | ) |  |  | 1,687 |
Crude oil | –swaps |  |  | 128,578 |  |  |  | — |  |  |  | 128,578 |
NGLs | –C3 swaps |  |  | 14,727 |  |  |  | — |  |  |  | 14,727 |
| –C5 swaps |  |  | 2,171 |  |  |  | — |  |  |  | 2,171 |
|  |  | $ | 404,118 |  |  | $ | (755 | ) |  | $ | 403,363 |
|  |  | December 31, 2014 |
|  |  | Gross Amounts of Recognized (Liabilities) |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of (Liabilities) Presented in the Balance Sheet |
Derivative (liabilities): |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –basis swaps |  | $ | (755 | ) |  | $ | 755 |  |  | $ | — |
|  |  | $ | (755 | ) |  | $ | 755 |  |  | $ | — |
For the three months ended March 31, 2014, the effects of our cash flow hedges (or those derivatives that previously qualified for hedge accounting) on AOCI is summarized below (in thousands):
|  | Realized Gain (Loss) Reclassified from OCI into Revenue (a) |
Swaps |  | $ | 836 |
Collars |  |  | 1,328 |
Income taxes |  |  | (924 | )
|  | $ | 1,240 |
(a) | For realized gains upon derivative contract settlement, the reduction in AOCI is offset by an increase in natural gas, NGLs and oil sales. For realized losses upon derivative contract settlement, the increase in AOCI is offset by a decrease in revenues.
The effects of our non-hedge derivatives (or those derivatives that do not qualify for hedge accounting) on our consolidated statements of income are summarized below (in thousands):
|  | Three Months Ended March 31, |
|  | Gain (Loss) Recognized in Income (Non-hedge Derivatives) |  |  | Derivative Fair Value Income (Loss) |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Swaps |  | $ | 125,777 |  |  | $ | (44,073 | ) |  | $ | 125,777 |  |  | $ | (44,073 | )
Collars |  |  | 8,415 |  |  |  | (39,148 | ) |  |  | 8,415 |  |  |  | (39,148 | )
Basis swaps |  |  | (11,353 | ) |  |  | (63,629 | ) |  |  | (11,353 | ) |  |  | (63,629 | )
Total |  | $ | 122,839 |  |  | $ | (146,850 | ) |  | $ | 122,839 |  |  | $ | (146,850 | )

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5618551-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708775-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624181-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624163-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708773-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624177-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579245-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579240-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41641-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624171-113959 + Details
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